OMF - Earnings call transcript Q2 2024

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Operator

Welcome to the OneMain Financial Second Quarter 2024 Earnings Conference Call and Webcast. Hosting the call today from OneMain is Peter Poillon, Head of Investor Relations. Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the floor over to Peter Poillon.

You may begin.

Peter Poillon

operator. you, Thank and everyone, for us. joining Good thank morning, you

use you X presentation, can of Let and contains me of second be Page OneMain directing by the statements Investor forward-looking investor begin found the in The Relations to quarter website. disclosures concerning non-GAAP the of measures. important section presentation which the XXXX

forward-looking to performance Our forward-looking in our about forth the beliefs risks discussion management's earnings and prospects, and as reflecting business current speak today subject from actual set will that of statements contain to statements and uncertainties release. and today. these press these future differ are materially inherent could certain financial are results forward-looking only statements company's cause Factors

on We caution forward-looking you statements. not reliance to undue place

be not replay after via to may updated you are at that remarks this have to we this today, of made listening and been point as XX, the herein you remind subsequent call. July some today, If

morning Doug. of remarks Jenny Osterhout include this will call to and Financial After Officer. now I'd Our formal Chief session. formal to Officer; turn Shulman, conclusion remarks, question-and-answer the from our and over conduct we Executive our call like will our Chairman Chief a the Doug

Douglas Shulman

the continuing for Thanks, operating our in to The today. very been saying of direction. years for that the tightened metrics morning, good in we've and we underwriting X the that with about joining Pete. year. head Good right I'll are thank half credit you first feel everyone, standards us start by almost our in resulting results

stronger the and pick originations saw second half quarter, we of During volumes year. we also the the expect see to in to up, originations start second

this strategy world-class in and progress closed affected will auto to minutes. quarter, in which a few advancing card million April by Capital generation our make and continue was Foursight also acquisition, the of $XXX building long-term finance businesses. Jenny credit We discuss

as started increase standards, Foursight And environment Even right expanded to offerings. acquisition our in year-over-year, underwriting by trends. improvement product is X% XX% drive Our receivables well driven where Total constructive we've as revenue to this supporting ability appropriate. competitive of now. quite tight pricing for us grew year-over-year. continued the origination grew our with

use and product innovation We to of profitable also growth. data pockets continue find science to

We our But from billion now I to original see a $XX.X remain receivables emphasize of we underwriting year-end, path to again want $XX posture. of conservative by that in billion. do quite up expectation our

moment spend consumer. of discussing Let health me the the a

customer credit variables. other monitor customers on so, Before we I into and lend income, we customer net consideration data you disposable trends, on while current our do by their based and hundreds proprietary former let that overall me individual remind risk, taking geography, of

talked in the the cross face. I've currents customers past our about

they the wage we've macroeconomic to This remain cumulative and has side, seen, did labor cumulative customer resilient holds up than well. base today, they the higher caught data our from with are growth pre-pandemic. into And On the as up caught XXXX. business true for compared expenses, wages with positive have have bringing net disposable markets inflation a and customers we with the our everyday as income

However, food, many particularly housing costs, and are still non-prime the cumulative of effect stressed of our about customers transportation. higher

serve access remains macroeconomic This underwriting. to to with consistent the of us environment. customer to provide customers allows approach nonprime to so this a approach responsible Our continually disciplined credit, do regardless but to

trends. at Looking

better for charge-offs seasonal consistent Loan than patterns. our delinquency quarter, patterns. basis line X.XX%, Adjusting with with seasonal the XX- trends down the and normal to dynamic normal X.X% points of was our XX-day expectations. headwinds that from delinquency in growth will net continued year last Jenny were Our end discuss, in XX are the

The vintages, comprises expect our front which feel receivables. we portfolio We good about to grow, of And to to with as overall XX% our newer performance our portion expectations. book that continues very performing of now line portfolio about continue improve. are our in

management Our focus operating acquisition as enhanced expense expense our of well business Foursight. operating the of ratio in leverage was our the second as X.X%, which benefiting quarter disciplined with was on the from

We continue the of markets to balance strength our management demonstrate conservative our capital sheet of access. and

until quarter, next raised coming to And some We secured maturity unsecured billion This unsecured the March XXXX. debt we of debt debt. $X.X and not our in proceeds our is of due used unsecured due XXXX. redeem

and with liquidity continues sheet balance program funding a maturities, of a to diversified runway a business staggered long and Our differentiator. a competitive strength our be core

our discuss both credit products, and advantages large us. now very up leverage me our auto and for which nonprime of finance card Let open key competitive markets

total the quarter, Much to we year XX% that attributable growth up products. X.X customers, new of million ago. these a served from During is

better from than finance Our were $X.X comparable end, quarter including receivables performance. Credit Foursight. business auto and in expectations is industry billion our receivables billion performance at in $X.X line with auto of the

that well. is team, consistent a together We have auto all about of including excited across finance great single benefits organically remain into business. and strategies organization. very We finance of dealer structure the entire integration going experienced technology acquisition, put go-to-market This The Foursight ensures we franchise auto business network. and an our the a Foursight leadership grown of strategic OneMain the

we of quarter. $XX business, the are this card both finance million network accounts XXX,XXX $XXX receivables June independent manner. than of We a had dealers franchise in platform more credit disciplined positioned XX, accounts in now added XXX,XXX as and in of well we scalable over And business million our receivables. with In and and auto auto access a to large very have a and to expand

our target metrics on-time app and for of BrightWay well features about reward that feel with customers We business. mobile product the continue resonate card customers. and key to great payments the our

and significant ahead. profitable in business in finance We continue While card we of for the position credit auto the that to similar will develop cards, confident both years we're our maintaining be remain posture us other future our growth a credit to tight to businesses products, expansion. quite drivers

briefly allocation. touch me on capital Let

priority to ongoing position the top in is Our business for us invest to success.

and We to technology that the every improve and that digital hurdles to underwriting also experience competitive continue invest and capabilities science, disciplined return products and standards and in our data channels, customer new our further positioning. to continue lend customer advance meets

to allocated quarter, the acquisition Foresight. of we this some Additionally, capital tuck-in

As I $XXX mentioned earlier, this gives into nonprime market. finance the platform billion us the continue expand to auto to

call X% approximately million. committed an With Share today's to We on regular quarter now are repurchases at that, a is for XXX,XXX price. the to in let Jenny. me yield $X.XX were share the also $X a basis, dividend, which strong annual healthy shares delivering second per over about turn

Jenny Osterhout

and Thanks, morning, everyone. good Doug,

was long-term credit continued excellent expense of continued well-executed and good strategy. by growth, quarter acquisition furthering highlighted our progress discipline the revenue second integration multiproduct Foursight, objectives Our on and performance, and funding

quarter of the million $XX GAAP XXXX. income per second net per or diluted $X.XX share in Second from quarter share, was down diluted $X.XX

results income included the XXXX. second C&I -- diluted GAAP with C&I adjusted $X.XX was share, acquisition quarter current associated accounting purchase the which up from adjusted Foursight, results. We of quarter of X% adjustments the per net excluded are our from

related we consistency recognition. With loans the loss aligned this timing to and to our secured certain of of acquisition ensure policies Foursight quarter,

reserve losses on This on impact generation however, It simply quarter offsetting capital release. by $XX secured those It an impact equal had this no earnings. did, accelerated million. with loans our

was in our losses, this The quarter. reserves. quarters. compares to million, quarter in does see million include but the first won't a changes As not generation include capital We in loan future does this resulting capital which $XXX $XXX generation impact reminder,

ago. billion, or receivables XX% Managed a from $X.X this up year quarter were billion $XX.X

to with Foursight acquired receivables as compared and receivables on in the Excluding X% grew managed April year. last by the quarter X

Second were of billion quarter down X% year-over-year. $X.X originations

As have closely maintained environment. monitor underwriting our Doug macroeconomic to said, conservative as continue we we the

expand conditions find our to pockets originations quarter we of our favorable offers and of new as certain improve improve in in data segments, market progressed. sources quarter, We take and trajectory improve growth However, advantage tools growth this and utilize originations. the were able to to

result, billion originations of managed increase the we and throughout and second $XX.X a in closer quarter, our XXXX expect to As by half to year-end. new receivables accelerated push originations now the

APR $X.X points a the quarter increased year and given up with by environment, in we've It around X%. pricing our Foursight competitive has constructive from been line The revenue improving discussed excluding XXX average as X% on second XXXX consumer originations, full billion, is in noting focused where on appropriate. past, to the also worth year we've to that compared was Total ago. X% growth basis of guidance loan

by up modest XX.X%. a $X.X receivables, Interest from offset in income billion, acquisition second in average loan yield. impact was higher the the the X% yield year-over-year, Consumer Foursight of was quarter reduction driven by including

XX impact up our the basis Excluding Foursight, is which have would points been XX.X%, yield about from last quarter. of

quarter million support receivables million, $XXX the in healthy funds. stability by growth our are loan debt in up increase year, growth $XXX pricing prior X% revenue investment as million, the to income. year, our clearly the Other Interest for the was modestly our well versus seeing average So and $XX by cost our of book primarily of actions prior in credit driven an driven impact higher up from we was the as on performance. accretive expense

bond impacted as expense to excess raised during late attractive those This used March was the of Interest the to our management a proactive cash at we by portion quarter fully debt as coupons and was proceeds result sheet the the balances. percent quarter a $X.X X.X% the XXXX quarter. of our our of and balance of continues receivables be of in in billion redeem

our of would Excluding coupon have been on noting environment. is have that X.X%. cash a interest the It expense excess our the in current we impact worth the cash, healthy also

by expect few a the Provision increase was of discuss I'll of to comprising expense continue and $XXX to million increase $XX provisioning entirely and full driven million, $XXX year receivables allowance organic interest The net during further almost approximately our we forward, delinquency a Looking moments. in quarter. in charge-offs X.X%. expense loss the million

with million the and $XX million claims in XXXX. our to Policyholder approximately $XX quarter. second benefits each We compared of expense comfortable quarter stated $XX million quarter remain expectation for previously was

delinquency Slide X and consumer Let's at trends. turn look to loan

XX in the on to down with line XX- delinquency pre-pandemic last since excluding which basis was X.XX%, seasonal of XX, Our year, end XX-day points patterns. June Foursight, is

year. adjust for trends in of the be pace box, approximately growth the better year-to-date pre-pandemic our in XX-day seasonal XX- delinquency this credit would half to our first slower of from you our If book than patterns XX% conservative

this see in on chart Slide the X. can You

year-to-date there that our results So effect. are the this because performance the look by are growth we masked feel in steady, underlying while improvements of book good

as it now booking originations today vintages, we define ago. performance of book total to portfolio, quarter expectations. a remains only of loans of with receivables are the total performance the represents We that compared it the of delinquencies. still is back X/X our XX% XX% we with the in and worth August XXXX contains book remain And of XX-plus Front front pleased noting starting line which as XX% of about as the book comprise while the

be runs We are confident will our the metrics. loss that book and down, as in delinquency further improvement back there

Let's C&I in receivables consumer patterns the recovery now half to quarter, And Recoveries second charge-off strategy. turn the we opportunistic seasonal to to and shown of in quarter X.X% remain the charge-offs. for net our The strong the the we Slide receivables on remained with net expectations. year, net XX. as from in loans or our X.X% charge-off of quarter, first amounting $XX million with of looking seasonally expect was rate the continued average for second down trends line net

reserves which $X.X with by were coverage. loss loss Loan loan at -- Foursight. increased trends the quarter impacted $XX The reserves shown the our million of million, on reserve acquisition acquisition Our associated also of ended reserve XX. billion, $XXX are our Slide

from loss XX.X% reserve down ago. ratio on June a XX.X% was Our XX, loan quarter slightly

of legacy of coverage this same. given reserve we're comfortable the macroeconomic current remains Our our portfolio with And reserves. environment, the level

by future turn X% XX. Now quarter. the expense the were last Slide Foursight offset the from our discussed investment continued our in for expense expenses quarter up driven $XXX the initiatives growth addition quarter, with let's and million base of in to Operating year-over-year, some

of leverage operating ratio benefiting improved quarter to management in the quarter, expense acquisition from operating continued Foursight discipline. from our last expense the as Our X.X% as well from inherent the X.X%

year We our for guidance products, new approximately year technology the expect track invest ratio are to of operating growth X.X%. continue current and on and of for to data the future expense through in remainder and the full

let's and Now XX. our sheet Slide to balance on funding turn

of million in we second $XXX $X.X billion April. securitization a raised billion, During X-year bond X.XX% at issued quarter, comprising revolving And blended the unsecured rate May. X-year priced in $X.X at issued a X.X% a

paper. than included a significant The was one in unsecured to our and executions dozen more investors offering date our of new strongest with demand

mentioned unsecured of I affording bonds. funds we funding maturity the debt over March utilized XXXX to even from remainder next. extended portion redeem has no of This March have profile we our until earlier, of remaining our maturities As and billion our a significantly unsecured flexibility issuances the and further of this $X.X now us stack the XXXX, year the

balance impacted the was our acquisition. of primarily end the sheet, Foursight up range net at Wrapping Xx leverage is within X.Xx, second the leverage which Xx the to our by quarter

to Turning XX, XXXX our Slide priorities. briefly

continue We the priorities at beginning year. good about to we of out feel this laid the

As expect I $XX.X as $X.X said billion, the in to about earlier, includes growth of billion receivables in year. year approximately Foursight originations the from with we as back now the end which of managed well half

expected to and guidance net expect at to of our guidance will charge-offs maintain for in expense year full our for X% X.X% the year, X% to be year. the range. growth is our X.X% X.X% approximately we land revenue We Interest

our I'll with XXXX at I with quarter We're Finally, ratio priorities. guidance started. year our strategic and around off the the to pleased leave expense we for operating full maintain year are how tracking X.X%.

back products future. With initiatives we Doug. on call focused that on expanding let me well making to the key are Importantly, position and that, excellent us turn also for capabilities progress strategic the over

Douglas Shulman

of Thanks, the first pace of positive our The in and finance the quite continued year company card half with very half businesses second credit and XXXX. the Jenny. results improved our for well auto beyond. pleased the of performance, direction of credit positioned the from and have originations progress I'm the

great build of June, We remain in we lender growing from our row, a OneMain's This them customers loved as non-prime company our the laser-focused in for the relationship as Institute. year feedback on honor named across the most about team on based was I'm as on consumer. is to Best members third culture. and position the pleased OneMain's OneMain workplace Practice with choice the that the also by

and proud you extend the to to thank customers. each thankful across such I'm team a to for our continued want United people extremely to let they as their other commitment me With excellence up group heartfelt support of questions. and to with serve States open and talented that, our work my members it

Operator

Our will Instructions] [Operator first Terry from Ma with Barclays. question come .

Terry Ma

in which a dollar impacted the think it? I'm the think in you adjustment It for I focus just the what's like I was charge-offs, X.XX%. that something getting quarter. was maybe indicated based the policy investors your us for is walk metric looks on? But remarks reported on And prepared right it Foursight ratio, you higher there through adjustment what why to made charge-off you charge-off the

Jenny Osterhout

question. Thanks Jenny. it's for Terry, the

auto, we acquired which and Let earlier, to and we but there's bit little brought This an when about by me I in really we it do points start can that what Foursight. And secured forward through certain said keep an then the -- we why I pretty important a mind. it acquisition. did loss some you common with of loans we when so means practices, our recognition did walk have for timing aligned that, this is

impact million amount was was an but include to The by net -- impact was reserves. does income. we increase because and gen charge-off changes XX% impact impact rate. was after-tax reserve of gen to $XX net offset -- so have not an losses remember, capital That include there no cap to generation. that's relief does tax a There to equal cap and

for And loss not release so million quarters, on that your include So you it rate. in on repeat shouldn't increase a annualized losses million equal it's impact an $XX will and $XX reserves. future

Terry Ma

the follow-up helpful. on just then trends. delinquency Got have I a And That's it.

seasonal guess delinquencies, to think actually of it's mentioned Foursight I You quarter. -- but better still X.XX%, last increase, XX, which year-over-year terms ex than was XX trends the XX the I in greater in is of magnitude And increasing.

guess, year. next do year-over-year So charge-off XX-day maybe see maybe your get credit start . And delinquency in to trends the to just about XX- metric year? I to talk charge-offs and this peak lower maybe half back in to the confidence we that decreasing need outlook

Jenny Osterhout

Okay.

This a in that take pieces. few Jemmy me again. Let Terry. is

First, down of going take year. view to losses. changed confident credit the in And peak let quarter. since today, go sitting like we for rest the here first our me Really, are our performance. the the of hasn't We're on losses trajectory

In year. of terms our X.X for annualized rate, guide loss X.X full ] should the maintained, for the our guide to we [ that you expect and

about our and -- trajectory about feeling good good for we're rest So the guide we're of feeling year. the the

Terry Ma

Got it. outlook past the And XXXX. what about

Jenny Osterhout

Okay. guidance provide don't We XXXX, but beyond

Operator

next our with from take We'll Moshe Orenbuch Cowen. TD question

Moshe Orenbuch

whether better your competitive kind talked in growth just you a half. about you that seeing environment, you -- resumption little little seeing competitive that the seeing the what in Jenny, environment talk you're and both it's and detail from point? second more out expecting what led Could Dug of bit and Great. of you're the borrowers fleshing a more that of to about

Douglas Shulman

our Yes. One, A below mentioned, it end quarter, the things. we XX% you perspective, as of the second I first we first near slightly we net uptick originations. guidance and quarter, increased to were want what ending in originations of -- were be Moshe. quarter in would our of saw XXXX. thought -- we our receivables of put though, couple an Thanks

were This quarter, XXXX. X% we below

originations So positive. is some and then with growth while the we've seen in an uptick seeing and trajectory light

credit have volume, box trade still have still of had a profitability. little more We the but a where bit like pricing lower higher tight we very we

want just to I So make tempered. it's sure

that volume. over nice constructive I we're it's points a right uptick seeing APR XXX the us Jenny still in now. by and average increased last we've or year. to competitive a very from for think mean mentioned, as I basis close environment,

have unions pulled the with competitors there prime digital banks, who in are our as some competitors some much of have and most more aren't of back but credit moved to plenty the competitors and participating market, There's customers.

making us. the that's and suite secured our but will we loss a now gives which we profile lower good still in And who at product, content, of have market, loans given product, we return that products. hurdle. XX% collateral actually still So core have be loan meet Notably, us a credit lower people can for then have a very in our to even

growth. we're in are risk the on tight but very the not we're box. So of on still We're we taking general, pockets credit finding increasing

good And it. so we together with the feel very environment, pockets and about competitive finding the we're

Moshe Orenbuch

talked Foursight the follow-up, your business. plans as core is the the at OneMain the growing for And two. just auto your about Maybe course a little next maybe going impact bit to you flesh of a bit auto little out or could integration how finance year a that as to of if over with you business

Douglas Shulman

Yes.

a purchase our scalable, the of several think bought great be to going We lot that I've executive platform. OneMain, a Their auto did One overall team the a We and platform when factors, they've So architecture. will it's there like we product. Foursight, tech talked them Head and be were now across diligence money auto tech team. our that Mark is Miller, we and CEO, They've about key a got Auto of before. is great got of on. our core

secured secured Our loan. by it a where and personal for is -- we looking their somebody have buy auto we loans and out make our loan loan an a traditional auto

a $XXX organically. to auto loan. portfolio, also of That's our we've independent built So million built a close auto an But different loans network direct we've dealer which is traditional not product. that's own

We which different is a dealer did a not network, business. franchise have

Foursight, network. buying added done And so by we've the what dealer franchise we is

to have credit both to a U.S. be auto together dealers teams our force independent management sales collections be unified work and collateral the a we're consolidated and We're there'll team. putting going with Now able across franchise

think in we of deliberate. being are I terms growth,

products We chasing our growth are not across right of any now.

feel that is very we as once a over gives tight that turned card, deliberately growth credit have it the before, the business of we as cleared to some things fully. personal have time. boxes now we'll this Foursight but significant across about scale imagine auto I We will us happen build talked be and able uncertainty platform, loans, and macro I've

Operator

with We'll Kaye next to Fargo. go Michael Wells

Michael Kaye

offset was that? of the the year, of there grow at trend to the in second I you about half guidance loan least finance continues could yielding hoping APRs. the you could forward from sort talk higher mix, the lower to but for asset going personal on auto Any be yields, with have some

Jenny Osterhout

You mention Michael, heard me -- Jenny. is this

quarter heard mention You portfolio Foursight, our that second me excluding was yield XX.X%. the in

quarter, pricing took XX that's points book. up really loan personal that's our we first the basis in So actions those from that from and

into the Foursight, that pricing we've -- yield loan a went obviously, And take to consumer one discussed, points first they're but those are going effect number starting so to XXX basis the down are and year. take things so And is modestly with that, quarter. there going of they which full are from hold, are about throughout actions

some environment. on in of still macro there's offsetting current So momentum yield that those the impact continuing -- the is and

of So there's yielding the also Foursight which business, auto lower is as -- impact that our and content. lower also has loss yields but better improves, and our get will then

choosing growth, lower So that quarter. the to volatility includes X% in lower Obviously, that trade-off. yield. to like revenue revenue Remember, of for which the that some loss the we to But we're trade-off. We guiding cards make like we're X%

today, in as were at we And we X%. quarter, sit this here

look you to want their yield but year, So and in going come auto forward, revenue XX% normalized also personal the XX% in in to loans XX% closer terms yield. be can you over should to range. for then of expect we time, the asked environment, and to And at XX% and a

trajectory long-term then on really a product sort it So that's more mix and forward, of the of that environment? in normalized portfolio of depends a going

Michael Kaye

we could . QX? you in increase expect QX like like ex big a in had of as mean, quarter-on-quarter Foursight I

Jenny Osterhout

of like the it of go for would forward I would for you put the flat more what terms in year. . think

Operator

We'll go next to Rick Shane . with JPMorgan.

Richard Shane

and portfolio the can Is correct? the moving loan you year-end little core bit. parts trends talk And but there to repayment . down of the looks to rate this higher are slowed about Look, me that that lot like the there expectations. quarter, how a a potentially much is contributing on it growth

Jenny Osterhout

good So customer behavior pre-pandemic our to payoffs a little trend are we see continuing early that levels. payment to continue with below

have partially this pay from So really XXXX environment early trend Doug by is away those perspective, about refinancing this early to driven down earlier competition. on from come as not constructive the But think an peak. that and we spoke the us going that they're

Richard Shane

Got it.

So you driving some not the this more attribute of behaviors going individual . away payment to in versus change loans stickiness that's or some that? factor

Jenny Osterhout

think I to customer payment of And in to I think and I customer our Yes. attribute behavior. not access. environment change and about really, as we mean would a sort the it behavior more

Operator

America. our from of Bhatia Bank We'll Mihir next with

Mihir Bhatia

starting Just on credit.

just like just to if Foursight there's sure I The that -- should include base? we from I and the understand to full losses the does for there? for make noise for like like moving credit any firstly, Just want use And this or guidance clarify. year, quarter, as this quarter parts the wanted X.X%

Jenny Osterhout

Foursight X.X to does should use and X.X you that So include X.X.

X As you first our is quarters you charge-offs our the guidance, then quarter. pretty think with comes improve includes and and changes within saw we be way one in would range, we to remain about comfortable the later. delinquency into Foursight. see it haven't any that And made range, it that this And from

in the impact from from you'd third . So expect that the quarter, delinquency quarter. to the see first rate

Mihir Bhatia

a sticking front right? dynamics credit, just book, the just just here. I X-part bit then wanted and back understand And in question with So the little I a more Got guess, to it. just

you book, on the smaller. book book? are talked like of That from curve about In perspective, it performance? cumulative you're vintage But I book, increasing, getting the we as -- back right to there. about the And terms calculation, front trying past the in have understand on way but it had book might effect . trending that like the worst the year XXXX . Normal delinquency the -- credit the was think loss losses still are of just the is past we rates understand a then of past loss do looks is back worst like I think think the -- year. Is the back an the by the the book period, front to the our in so

Jenny Osterhout

Yes.

first Let on front second me take question your the book.

You can as we and you line. of that think look And loss also like as performing line guide pre-pandemic, perform. benchmark in book. to for see XXXX. think at there And booking so it the you can we we are what seeing And of as or X% can our in XXXX X% we're our front

is our that XX XX% our so our about The -- XX% receivables, back book up of of about receivables delinquency. X/X makes of XX-plus

loss So metrics. curve curve. it portfolio run goes still up It impacting loss characteristics the off, -- clearly, the pretty shows continues a to our it's character the typical that credit as aging are of it remember, and for an portfolio. ages, And

now, the its performance. book focused on is front really, we're what So right and

our the back book, on looked at front If increases you'd you on metrics book. that back XX-plus typical see

Operator

We'll go next Rowan Janney. with John to

John Rowan

comment on Just last the rate. a on point clarifying the charge-off

charge-off relative I'm card loans. would year little if that the X.X confusing. inclusion the consolidated I the for credit just apples-to-apples. charge-off loans, sure not loans in the exclusion credit year includes excludes include a is but . from but we're the want to get of to make Foursight full the -- using relative for I we're C&I, card loans consumer comparing I think, X.X%, card guidance. when said mistaken, you calculating credit the to But guidance So quarter the it

Jenny Osterhout

Yes.

And is includes total company the for guide quarter, company. cards rate total loss was our So our and this X.X.

John Rowan

quarter X% charge-off in for And would also charge-off. is be what's the would the be so total we're for correct? using X.X That guide the going is into that right? well, included as And XXXX year, the what's consolidated first

Jenny Osterhout

Exactly.

John Rowan

I off I the based comment, wanted -- think it have of to confusing Okay. been just that. a prior little because would

guide the at Okay. expense And You the year, half for first quickly, sharp year, -- the operating the the for expense were of year a X.X% indicate then relatively ratio. just the right? in does of so half ramp-up back

have Is correct? you to go So obviously, expenses. based math, in materially. my it to out on up quarter exceed a operating And X.X%, that the average certainly pretty

Jenny Osterhout

So, full we acquiring who last of quarter, leverage. about actions expense seeing we operating has you're as impact impact the talked us that a Foursight reminder, the of the those took. quarter, And you're some seeing great and also this of --

great real in operating a strength. leverage business also and We as our it see see

year Just were you to at X.X%. ago, give a context, some we

moving the direction. we're So really in right

you're confident I quarter. future. very those good X.X%. and demonstrate year for low of that to that of that's I discipline, between balance full And guidance this in just point because seeing it's doing trying management just pieces think we're and sort what a mentioned, still focus two is investment here cost feel we a the And of and

John Rowan

No, I get it.

the investment is brings half the assume the . back of I would operating the year. for what up piece expenses So

Jenny Osterhout

Yes.

Operator

We'll with go to Vincent BTIG. next Caintic

Vincent Caintic

sort dig performance maybe credit First of of back product line credit, with going in -- to wanted to wanted if you're seeing sort by could. of to what I you

doesn't. guess the point I So X.X% to includes your credit card X.X% about the prior

So like are product be would different helpful. the maybe how categories talk That if about you performing. could .

Jenny Osterhout

take to Vincent. I'm Yes. that, happy

normalized and that's at quarter, $XX.X So -- still that our and our on in million loans said were flowing cards, we these charge-offs we've have XX-plus at we're And teens. the remember, our through booking have will XX.X%. testing this net was low losses

pretty the ability running focus we're We're that really the have for that returns. our for taking, like we're to cautiously price is risk-adjusted the risk and returns also this on now, we We overall and seeing. and cards

to overall I our mentioned looking seen mentioned earlier. now and of as industry growth pretty Doug as this book, for delinquency and an that's what Investor we number report back we Day, personal you over based Foursight, but we're preparing period. and business a on and if auto earlier, loan think that's bringing compared we're the said as consumer XX% And trends, go integrating at cautious to X.X% the scale. and together on that. and And on that and risk-adjusted good the about time On together, outperform X.X%. starting think really auto, during for which looking we're growth we've trade is attractive loans pretty book we return we the to

Douglas Shulman

just I'm been for we cards we're has I are customers bunch the like this there's I inflection of in cumulative improvements into card, Let where second that holds portfolio. still loan, to is up bringing broadly an the do because the held now. inflation. our books losses consumer, add the this first specifically holds our from on we're we at card, seeing like think that's credit. a have generally excluding questions consumer come the loans and The bulk very we our small for we saw look but point quarter if delinquencies for now feel we the me . And that quarter. caught the income of company, Income the think and where have because speaking a across -- in One trends because consumer on with

loss for our run as we our equity around all consumers do our of XX% that we're back also so trends we equity And in. make credit models super have still model just I and stress cautious. normalized say get income putting sure should to of mentioned our net products, to content taking bring return We're put XX% we across them are on And being on what would disposable kind to that. the we

So got the in and where some box, And we have still right or so an But they're But environment we auto credit today, really tighter booking all of are a trends personal whether the all loans direction. loans. there's across. The cushion loans moving means in or extending credit caution. less we're cards we're you cushion. trends the we're booking as like we've that know,

Vincent Caintic

helpful. very segues next question. that my to And That's

or forward. I'm going originating seeing you're consumers differences just any seeing wondering you're applications if So your the in you're

about competitive environment spoke better. the getting You

[ wondering that, you're you're is maybe But encouraging, the increasing more quality if accept better a consumer card seeing, we're able we memo of pass for looking is a your to price. rate typical maybe credit I'm things deconsolidation price quality willing in So might And seeing credit the like wondering credit the consumer have than who's to say, a terms I'm or what lot along of you're is customer if card more ]. pricing average. seeing better for,

Douglas Shulman

higher We're were in our customers to Look, the we have majority than credit Yes. we booking our quality continue pre-pandemic. customers. of

and bringing held customers I inflation, XX% think up XX%. XX% to this is in call rent together everyday we're expenses gave care, I of from it's But true, food, as data, are some we put for up on of basket medical general that to books. the around the last housing, Wages our XXXX cumulatively a and about energy,

leads the like This disposable bringing to customers on. the higher and on. What net is across income we're that all -- we're customers this is for bringing again, aggregate

that once they loan So the cover expenses income them have any expenses all and they to have. cushion giving their other have we're their that and more we

income, So they pre-pandemic. flow aggregate, the net have right cash more more answer is, customers than disposable did more cushion, excess now in

customer up. every which year, in expenses, help like to is we're still hit customers half But this expenses, going first different course, a with who I and year, should feeling juggle where up think have expenses credit forward. have general, have incomes set you trends come we've -- have have this of this of Of the point caught unexpected inflection

Operator

now Deutsche to with go Mark DeVries Bank. We'll

Mark DeVries

I was forward. a current little of in the up that half charge-offs given books on read you of a are haven't range delinquencies the kind surprised is a months X on and tightened for kind decent yet year guidance

So low of the to kind relatively what range high end? the the what's And gets keeping scenario you end versus wide?

Douglas Shulman

talk Anything year on. the changes only and that made, the the of The as about outside more guidance. changes within we were goes it is, we as are we'll Yes. guidance left Mark,

So we haven't just in -- given change we guidance. any

Mark DeVries

Fair Okay. enough.

seeing. ratio that you peak kind see commentary the you're still trending on . is some of given the improving a year and the you of some first good reserve trends the in the the of thoughts feeling on share Any can of where Just half positive of course charge-offs the over year?

Jenny Osterhout

We've that to before our going hold question. reserve we're rates the for steady. said Thanks

on our the alignment our -- we can is ] would in reserve you XX.X. the see earlier, with but to environment. which in major unless modest really brought ratio quite policy you impact -- modest macro so coverage, quite rate I see that Foursight the continue coverage of expect shift a And to and mentioned we that change went from XX.X [

see to expect wouldn't sudden change some in our I reserve So levels.

make need I about good feel future order to changes to to very think we'll reserves. the in

Mark DeVries

macro for last of the me. and credit significant what I Okay. bit clarify if little -- get raised wanted guidance it looking just for? loosening the kind Is are And improvement true, of one receivables in then of same credit just a any to box? that type question lose other you the that's does to the not assume box or

Douglas Shulman

have loosened we Yes, not our box. credit

the don't conservative what need need we to it just again, I we're to open. continue And well. perform see we're of posture. we before. think some this a on leaving macro, may to to would given recent to is We We I've see be company that vintages still there's A lot growth. taking said in uncertainty the But careful. money the manage being the table.

there's headed of those. think I is of direction right the in stability period -- just in one the credit

We also do weather vein testing.

we kinds customers and testing product new and credit our states type on -- around So below have box we're geographies, customers, risk unsecured we're customers, grades, testing of former different customers, different different always just secured, different a so coming want pockets be book, to XX% see return on open loan to in. tests that up equity as we our will and larger over those which into start we'll the well profile, extend those our

aggregate, be we kind not going of the I specific pockets talked about. variables managed again, is the managed And box in it's in to very credit that around so -- as

much even the in direction. I and business. better. down, coming the look, environment, feel direction see things We view in see of time better and a are where metrics rates this the consumer moving we've our the is we we so where good direction. cyclical could in the see will that and tricky world uptick the origination, a a trends is now is moving is a in feeling And -- a pretty come can our consumer both seen you right think And lending be modest right could credit a Interest lot are bunch credits moving right in getting

Operator

to now David Scharf go with We'll JMP.

David Scharf

the waiting But growth, Doug, maybe the as almost of have cumulatively answered. about been Actually, have is consumer and net credit around said, kind the than consumer XXXX levels, in was on box. try weather in feel broader been just think we liquidity maybe the wage stress little place a described you disposable because to and it the the credit caught would sooner my as you're commentary -- prepared there it's hasn't indicators and may like your feel household If indicators of environment addressed, interesting income that with having remarks sounded to phrase allow more you I that still largely to that. on? just macro you -- some in Or questions of this some it about widen comfortable veining in it is up inflation, what you They've box, you it differently. broadly later? caught rather getting back anything testing recognized

Douglas Shulman

a to book little perform of want continue I we over myself repeat see period because a well to going I'm bit our went it. to mean I just through time.

will seeing. the still have It a We -- to it bang. decide at we're going overlay look specific. won't is vein, are that weather isn't open, big the be pockets XX% We overlay very that stress we if But our when the we in overlay an is we be book on to of did August in uptick you put tightening put the went we XXXX to our X%. it unemployment to major the perspective, XX% X% see stress when would that

to the what that working around -- macro is are and we how the kind employment rates. we're Fed and So does the factor is environment big interest do how of is watching how rates

at are we our the by we product, what where look by of not of our we'll not geography, some Again, customer, aggregate, macro. that's And It's proprietary that the seeing data credit are the book so main where have, is factor we and we those. what and all opening. trends. But what's but applications see, channel, by are coming in in by see do

David Scharf

helpful. And on a just that. That's maybe follow-up

by and many auto box and any specifically, thinking As in rates credit from nuanced broadly then Obviously, that unfolds. think Should car so there if asset -- personal should broad there we about differences loss loosening your improved of you're Are felt rates, a by also more differently are it the are loans things be we classes? market. recovery are or among about we value auto collateral be how equally are underwriting to used improved be the is going should which . prices. mindful eventually, be there

Jenny Osterhout

Thanks. it. Jenny. take It's I'll

I are asset we're heard they what describe So at different they think books. And mostly Doug our move looking differently. and classes, you is

individual at looking and you're those books. so books pockets And within you're at looking those

subsegments thing it. whether to are as that really, decisions to of if risk smaller comes it's segments and singular -- certain their in a you channel growth But come unsecured, talking making about and -- and on a we're products, secured certain it based happens. about the there's that pieces it's So or what variety they

have different. of So think auto, different you're set credit a doing I has scene on right, And to you're there's is do It doing same box. the and and -- recovery -- strategies with collateral, different it you you're a cetera. et the

-- different. do I them of slightly I as would So think

individual times. see they And books individual we're different move at and within the those really, we what looking slightly think I books. at

Douglas Shulman

saying the Yes, to get delinquency managing there's follow further different collateral. around And me time But on follow-up patterns, question, into the by even our out franchise dealers, just happy there's that quarter. specific a of let end calls. that we're different as book, feel and it good and within on you're of we we're auto up. are And to and a lot happy -- collection patterns do about we is

platforms the of card that didn't is on you trajectory slight effect and that can grow base from. base uptick by auto, originations, more and -- so got full of in feel clear the continuing feel we credit. quarter, -- when do today. which macroeconomic do we environment. have And setting the we really good We the encouraged now around nice that We're the we in are really clarity about see the We've

we're We're call the of to everyone has thanks and day. So follow-ups hope do great all joining for you, happy and around. a with

Operator

lines this does Financial XXXX Thank Please wonderful today's you. Quarter conclude your Call. disconnect day. Earnings time, Second OneMain at This a Conference have and

OneMain (OMF) 31 Jul 242024 Q2 Earnings call transcript